Amazon takes on Netflix with a stand-alone video streaming service in US

Amazon is taking on Netflix and Hulu with its own stand-alone video streaming service, just weeks before Netflix raises prices for longtime subscribers.AP | Updated: April 19, 2016, 09:53 IST

Amazon is taking on Netflix and Hulu with its own stand-alone video streaming service, just weeks before Netflix raises prices for longtime subscribers.

New customers can now pay $8.99 a month to watch Amazon's Prime video streaming service. Previously, the only way to watch Amazon's videos was to pay $99 a year for Prime membership, which includes free two-day shipping on items sold by the site, and other perks.

At $9 a month, Amazon's stand-alone streaming service is $1 less than Netflix's standard membership and $1 more than Hulu's basic subscription.

Netflix said earlier this year that a "substantial number" of its longtime members who paid $8 monthly - and have been protected from price hikes - will now pay an additional $2 starting in May.

Amazon's decision to break off its video streaming service could cause some defections at Netflix, wrote Wedbush analyst Michael Pachter in a note to clients.

Both companies have invested heavily in original and exclusive programing. Netflix has "Orange is the New Black," ''House of Cards" and a couple of series based on Marvel comic characters. Amazon's offerings include "Transparent," ''Mozart in the Jungle" and previously aired HBO shows. With Hulu, users can watch many current TV episodes a day after they air on a network. Hulu is also growing its exclusive offerings, with "The Mindy Project" and "Difficult People."

In a review of Netflix's first-quarter earnings released Monday, CEO Reed Hastings said he wasn't surprised by Amazon's decision to offer a stand-alone streaming service.

"It's natural that everybody's coming in as they realize that the future is Internet TV," Hastings said. Representatives for Amazon and Hulu did respond to a request for comment.

Amazon may be a rival, but Netflix is also an Amazon customer. The California-based streaming company uses Amazon Web Services to store its content and help run parts of its site and apps.

Besides its stand-alone video service, Amazon is also offering a new pay-as-you-go option for its full Prime membership for $10.99 a month and comes with free two-day shipping, video streaming and other perks. Amazon's website said that users who opt to pay $10.99 monthly, instead of the $99 annual fee, can cancel at any time. The $99 a year option remains the cheapest way for most people to get both free two-day shipping and video streaming, equaling about $8.25 a month.

Shares of Seattle-based Amazon.com gained $9.46 on Monday to close at $635.35 while Netflix's stock declined $3.11 to close at $108.40 before plunging by more than 7% in extended trading after the company's management issued a disappointing forecast for subscriber growth during the current quarter.